경영자 능력과 예산 톱니현상

[Purpose]In this study, we analyze the relationship between managerial ability and budget ratcheting. We first examine whether an increase in managerial ability leads to a reduction in budget ratcheting. And then we investigate whether the effect of managerial ability on budget ratcheting is amplified under conditions of intense competition, intensive monitoring, and effective managerial incentive compensation. [Methodology]Based on the studies by Aranda et al. (2014), Bol and Lill (2015), Bouwens and Kroos (2011), and Leone and Rock (2002), we established research models to analyze the relationship between managerial ability and budget ratcheting. Using data from 742 branch－years of a domestic apparel manufacturing and retail company in Korea from 2014 to 2017, we performed regression analysis. [Findings]We find that higher managerial ability of branch managers leads to a decrease in budget ratcheting. We also find that the negative effect of managerial ability on budget ratcheting is stronger under conditions of intense competition, intensive monitoring, and effective managerial incentive compensation. [Implications]This study contributes to existing research by identifying managerial ability as a critical factor influencing budget ratcheting. The study also contributes to previous research by uncovering situational factors such as competition, monitoring, and managerial incentive compensation that influence the relationship between managerial ability and budget ratcheting. These findings provide empirical evidence that broadens our understanding of goal setting in budgeting practices and offers practical insights for enhancing budgetary control.